EnTrade successfully trials uniform price scheme for environmentally-minded farmers

Posted: Tuesday 2nd April 2019

A group of farmers in Dorset have all been equally rewarded by Wessex Water for making reductions in the levels of nitrates that are lost from their land and entering Poole Harbour – an internationally important environmental site – by growing cover crops, thanks to a first-of-its-kind uniform price scheme by online environmental trading platform EnTrade.

The new scheme, called Fundspreader, ensures that farmers in a catchment who have agreed to carry out environmentally-friendly farming measures are all paid the same rate (£/kg N) for doing so and the reward they receive is based on the amount (kg N) that they save. It differs from the conventional form of ‘reverse auctions’ previously implemented by EnTrade whereby farmers competed for funding from environmental beneficiaries (such as water companies) by indicating the rate that they were prepared to receive.

EnTrade developed Fundspreader with the help of Exeter University and trialled it in February 2019 after listening to feedback from the Poole Harbour farmers, who have worked closely with EnTrade since it launched out of Wessex Water in 2015.

Guy Thompson, EnTrade’s managing director, said: “The farmers in our Poole Harbour focus group wanted to try something fairer and simpler so that they don’t miss out.

“Fundspreader works by the farmers each entering the minimum price they’re willing to accept for adopting a measure, meaning there is no risk on missing out last-minute if another farmer enters a lower bid and secures the contract. It ensures that funding is spread to optimise the benefit to the farmers, the funder and the environment.

“Fundspreader is very much an evolution of the EnTrade offering and there is still a time and a place for reverse auctions – as well as flat rate payments. Our platform is flexible enough to accommodate the circumstances relevant to a landscape, including the needs of the buyer and crucially the farmers involved.

“At EnTrade we are pioneering the type of simple market mechanisms we see as vital to funding environmental land management by farmers, to prepare the ground for the transition out of the Common Agricultural Policy.”

The trial ran for two weeks from mid-February and removed 30 tonnes of nitrates at the lowest cost on record for Wessex Water. This is an estimated 10 tonnes more than what would have been possible using the previously implemented reverse auction approach.

A further trial will take place in June 2019. In addition to this, farmers are now able to upload the evidence of their measures using EnTrade’s verification app, which launched in January 2019.

Exeter University’s Land, Environment, Economics and Policy Institute advised EnTrade on the format of Fundspreader and sees it as a “highly innovative addition to the catchment management toolkit.”

Brett Day, professor of environmental economics at Exeter University, said: “Drawing lessons from auction experience in other sectors, EnTrade’s new scheme seeks to simplify bidding and deliver a fairer outcome for participating farmers, ensuring every successful farmer enjoys the same reward for the water quality improvements that they commit to deliver.

“This is a big step forward in creating catchment management auctions that foster the mutually-beneficial partnerships between water companies and farmers that are needed to deliver long-term environmental change.” Normal 0 false false false EN-US X-NONE X-NONE

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April 2021

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